The Tax Publishers2019 TaxPub(DT) 8064 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 68

It was beyond doubt that there was no credit on account of loan or any sum as contemplated under section 68 in the year under consideration in books of account of assessee, therefore, no such addition was warranted under section 68. There could not be any addition towards cash credit on account of opening balance of loans carried forward from earlier years. As such, the amount was credited in account of partner, thus even if it was assumed that provisions of section 68 got attracted then it had to be applied in the hands of partner of assessee because amount was credited in the account of partner by way of adjustment entry.

Income from undisclosed sources - Addition under section 68 - Loans of assessee firm transferred to capital account of partners -

Assessee being a partnership firm transferred certain loans and advances, borrowed and provided in earlier years, to capital account of partners by way of passing adjustments entries dated 1-4-2011. The AO treated such loans of firm transferred to partner account as unexplained cash credit under section 68 and accordingly made addition.Held: It was beyond doubt that there was no credit on account of loan or any sum as contemplated under section 68 in the year under consideration in books of account of assessee, therefore, no such addition was warranted under section 68. There could not be any addition towards cash credit on account of opening balance of loans carried forward from earlier years. As such, the amount was credited in account of partner, thus even if it was assumed that provisions of section 68 got attracted then it had to be applied in the hands of partner of assessee because amount was credited in the account of partner by way of adjustment entry.

Supported by:CIT v. Usha Stud Agricultural Farms Ltd. (2008) 301 ITR 384 (Del) : 2008 TaxPub(DT) 1780 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 41(1)

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